Processing business transactions such as shipment transactions between parties has been a manually intensive effort and has experienced little change. For example, shipment transaction processes involve a goods transport path and a payment process path. The goods transport path typically starts when a carrier picks up the goods at the shipper's warehouse dock. The carrier receives a copy of a transaction document, for example a bill of lading (BOL), from the shipper. This type of transaction document includes information associated with the shipment transaction that is used by the shipper and carrier to track the shipment of goods. The carrier transports the goods to the receiver where the receiver signs a copy of the BOL to verify receipt of the goods. After the carrier has delivered the goods to the receiver, the carrier also submits the receiver's signed copy of the BOL to the carrier's headquarters.
The payment process path starts when the carrier picks up the goods from the shipper. The carrier sends a copy of the BOL to the carrier's headquarters for processing. The carrier headquarters rates the BOL. Rating involves determining the shipment cost which takes into the account various shipment parameters such as the size, weight, type of material, and destination of the shipment. The carrier creates an invoice, sets up an accounts receivable, and sends the invoice to the shipper's accounts payable department. The shipper, either internally or via a third party, audits the invoice to ensure the final cost is proper.
One of the more burdensome aspects of traditional transaction processes involves reaching agreement as to the final cost. If there is a dispute as to final cost, the parties to the transaction begin a burdensome and sometimes lengthy negotiation process in an attempt to settle the dispute. For example, if the dispute is resolved in a transaction involving shippers and carriers, the shipper sets up an accounts payable for the transaction. The shipper will then send payment to the carrier and clear the accounts payable. Traditionally, the process for paying the carrier and clearing the accounts payable involves several manually intensive steps. Upon receipt of payment, the carrier clears the accounts receivable. Traditionally, the process for clearing an accounts receivable includes the carrier manually inputting final payment information into the accounts receivable system.
The traditional approach can lead to many disadvantages for a transaction between one party and another party. Typically, however, there are multiple parties involved in multiple transactions, which makes the situation more complex, and that much more slow and inefficient. The process is manually intensive in that it relies on the hard copy of transaction documents (e.g., purchase orders, invoices and/or a BOL for proof of delivery and payment), resulting in a series of repetitive and time consuming steps. Also, in the instance where a BOL is used, each BOL is often rated multiple times by multiple parties creating excessive redundancy. Similarly, other transaction documents are also often kept on file at multiple locations, which also creates redundancy.
Traditional transaction systems are also highly susceptible to billing errors and fraud. For example, there is no connection between the delivery of goods and when the shipper is billed for delivery in shipping-type transaction systems. This may result in double billing, no billing at all, or overbilling the shipper for freight delivery charges. Also, auditing error may occur that results in incorrect billing or payment. In addition, the carrier waits a disproportionately long time for payment while the invoice is being audited and/or disputed. For example, traditionally, a delivery takes about five days whereas payment takes about thirty days. This unnecessary delay adversely affects the carrier's working capital resources.
Additional costs arise as a result of existing inefficiencies in a variety of transaction processing approaches. Many of the costs are individually small, but very large in the aggregate. For example, typical parties to transactions incur administrative costs such as those relating to the cost to create and deliver the initial invoice, costs of resolving billing disputes, costs of providing a signed copy of the BOL to the shipper, and costs of posting accounts receivable. In addition, the cost of parsing, recognizing and categorizing documents related to these and other items add to the administrative costs of transactions.
An additional challenge to transaction management involves the inability to obtain immediate information regarding a shipment. Since the process is largely conducted manually, it is very difficult to track a shipment. To learn of the status of shipment or payment, there are various manual steps involved. For example, if the shipper wants to know if the carrier delivered the goods and if the payment has been made, the shipper must call the carrier and the appropriate financial institution. Shipping-related information such as BOL-type documents and others is typically not readily available to other parties to the transaction without direct access to shipper-attributed systems.
There have been numerous attempts to improve existing transaction management approaches, such as existing shipment and payment processes. Some improvements have been made, for instance, to each separate step of completing a shipment transaction, but the entire method remains relatively unchanged. For example, freight agents are used by shippers to schedule shipments and to process the invoice from the carrier. Also, third party service providers have taken over the role of managing the shipper's accounts payable department.
Another attempt to improve this burdensome transaction process involves the use of the Internet. Carriers have offered Internet access to their shipment information. Shippers access the carrier's Internet address and find out the immediate status of the shipment. A disadvantage of this system arises when, as in many applications, the shipper is using multiple carriers. In this typical situation, the shipper separately accesses the address of each carrier in order to find out the status of each shipment. This is unduly time consuming.
Another disadvantage of traditional systems is that reference numbers used by different parties to identify a particular transaction are not compatible. For example, carriers maintain shipment data organized by reference numbers generated by the carrier, so shippers typically must access the data using the carrier's reference number rather than the shipper's reference number. The shipper and carrier track each shipment using multiple reference numbers.
The above and other difficulties in the management and coordination of business transactions have presented challenges to the effective and efficient management thereof.